Macau’s gross gaming revenue (GGR) is set to experience robust growth in 2024, with a projected year-on-year increase of 28%, reaching approximately 80% of pre-COVID levels, according to a report by investment bank Morgan Stanley. The positive outlook follows Macau’s impressive December 2023 and full-year revenue results, surpassing expectations and positioning the region for a promising recovery in the coming year.
2023 GGR Exceeds Expectations:
Macau’s GGR for December 2023 reached MOP$18.57 billion (US$2.30 billion), surpassing traditional seasonality expectations. The strong finish to the year, with full-year GGR totaling MOP$183.1 billion (US$22.7 billion), sets an optimistic tone for 2024.
Yearly Growth Projection:
Morgan Stanley analysts, Praveen Choudhary and Gareth Leung, project a year-on-year GGR growth of 28% in 2024. This anticipated surge is expected to propel Macau’s gaming revenue to around 80% of pre-COVID levels, signifying a substantial recovery for the region.
VIP and Mass Market Recovery:
The analysts suggest that December’s VIP recovery, estimated at 30% of 2019 levels, coupled with a mass market recovery approximately 20% above 2019 levels, contributed to the strong finish in 2023. The positive momentum is expected to continue, supporting the overall recovery.
January Projections:
January’s GGR is projected to remain flat month-on-month at MOP$18.8 billion, representing 75% of pre-COVID levels. This consistent performance in the early months of 2024 indicates a steady recovery trajectory.
Operational and Capital Expenditure Outlook:
In a previous note, the analysts highlighted expectations for increased operational (opex) and capital (capex) expenditures for Macau’s concessionaires in 2024. The factors contributing to this include wage hikes, mandatory non-gaming investment commitments, and potential competition for gaming hosts/sales.
Wage Increases and Non-Gaming Investment:
Macau gaming companies are anticipated to follow the government’s lead in increasing wages by 2% to 3% in 2024. Additionally, the opex portion of non-gaming investment commitments and potential competition could exert upward pressure on opex.
Capex Acceleration:
Capital expenditures are expected to see acceleration in 2024, with companies prioritizing non-gaming spend. While Sands has the scale to allocate 76% of its committed investment to capex, other operators may need to focus more on opex, potentially impacting their margins.
Macau’s gaming industry is poised for a robust recovery in 2024, with GGR expected to witness significant growth and approach pre-COVID levels. The positive trends in VIP and mass market recovery, coupled with projections for steady performance in January, indicate a promising year ahead for Macau’s gaming sector. Additionally, increased operational and capital expenditures reflect the industry’s commitment to sustained growth and development in the post-pandemic landscape.